New economies sink while old institutions rise - Mark Thirlwell

So, now we have to add countries to the ever-expanding list of casualties from the financial crisis.  Iceland has been the most famous sovereign victim to date, but a wide range of economies are suffering collateral damage of varying degrees.

Eastern Europe and the Former Soviet Union have been particularly affected: Hungary is under significant pressure, Ukraine is waiting for an IMF bailout, and the Baltics are suffering too. Elsewhere, Argentina (again!) and Pakistan are reportedly facing imminent default. Meanwhile, emerging market banks have been suffering from an ‘Iceland Look-alike contest’, with victims ranging from Kazakhstan to South Korea, while falling oil prices are now denting growth prospects in the Middle East. And even an emerging market powerhouse like China is turning to fiscal pump-priming in order to prop up growth.

One consequence is that, having been largely written off as an irrelevance in recent years, the IMF is now back in the front line of global finance. The Fund is currently discussing packages with a number of countries, including Iceland, Hungary, Pakistan, Ukraine and Belarus.

Staying with the theme of silver-linings for ageing international economic institutions, another thoughtful angle on recent events is provided in this blog post by the CFR’s Brad Setser, explaining why, in the current financial crisis, it's turning out to be  a good thing to be a member of the G7.

Finally, for an interesting view on the likely consequences of the crisis for the balance of power, take a look at this piece by Bill Emmot, which canvasses some potential winners and losers and argues that the current conventional wisdom may be getting this quite wrong.

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Three scenarios for the RMB - Mark Thirlwell

The debate over the future of China's currency regime continues to rumble on ahead of the US Treasury's pending decision on whether to declare China a currency manipulator. There are three basic scenarios:

1. Currency Kabuki

Washington and Beijing continue their now almost-ritualised disagreement over the value of the yuan. Both sides play the game with an eye to domestic politics: Washington shows it cares about the complaints it receives about 'unfair' Chinese competition and deflationary policies, and Beijing shows it can stand up to foreign 'bullying'. Otherwise, nothing much happens. 

In the near-term, this does not look like too bad an outcome. But it would leave both the world and Chinese economies still dealing with the economic consequences of a misaligned exchange rate. Moreover, the disagreement over the currency would continue to drip its poison into the international economic environment. 

2. Back To The Future

We essentially get a re-run of 2005, whereby Beijing decides that it is both in its domestic interests to adjust its exchange rate regime and that there are international policy benefits to doing so. The first step would probably be some modest down payment on currency adjustment (for example, in July 2005, Beijing delivered a small 2.1% appreciation of the RMB against the dollar), followed by further, measured progress (between July 2005 and July 2008 the RMB was allowed to appreciate by almost 19% before it was effectively re-pegged).

This is the best-case scenario, since both China and the rest of the world get a Chinese exchange rate that is more closely aligned to the underlying economic fundamentals.

3. Trade War

Both sides refuse to back down, a frustrated US turns to aggressive trade measures and Beijing responds with trade measures of its own. This is the worst-case scenario.

I have tended to think that some combination of the first two scenarios is the most likely. That is, both sides will play Currency Kabuki for a while, but we'll eventually end up with a similar kind of compromise to the one we got in 2005.

This outcome is actually in the interests of both sides. There are good domestic reasons for China to adjust its exchange rate, given that current macro policy settings look increasingly inappropriate. Indeed, many – although certainly not all – voices in China agree. Furthermore, neither side would benefit from a trade war. I continue to think this is the most likely outcome, and even in the heat of the current debate there are signs of compromise to be found.

That said, my worry is that the probability of option 3, which I used to think was very low, has started to rise. In large part, this seems to reflect the quite different environment in the US and China prevailing in the aftermath of the GFC.

In the case of the US, a much weaker economy, a significantly higher rate of unemployment and an increased sense of economic vulnerability all point to a reduced tolerance for another round of Currency Kabuki. A telling indicator of this shift is a reported decline in the willingness of China's erstwhile defenders in the US corporate sector to step up to the plate this time. Other parts of the world may be losing patience too, albeit more slowly.

The China story is almost the mirror image of this one. China's strong economic performance in the aftermath of the Great Recession, together with recent policy failures in the US, have produced a parallel decline in Chinese tolerance for lectures on economic policy, particularly from a country that has just so decisively bungled its own economic management.

Even before this latest currency row there were some signs of a sort-of trade 'cold war' between the two economies. The last thing the world needs is for this cold war to turn hot. It would be a nasty irony indeed if, having got through the worst of the GFC and congratulated ourselves on learning the lessons of history by refraining from the kind of protectionist responses that scarred the 1930s, the world ended up heading down the Smoot-Hawley route after all.

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Hungry Beast - MDMA/Ecstasy Beast File

3,4-Methylenedioxymethamphetamine – that’s MDMA, the drug used illicitly as “ecstasy” – was first created completely by accident in 1912. Its initial foray into the world of medicine was cut short when people started using it recreationally, leading to it being banned as part of the “War on Drugs”. But doctors continued to campaign to be able to use it in medical research, and recent developments have shown the drug’s potential for use – in conjunction with psychological counseling – to treat post-traumatic stress disorder, trauma and anxiety.

Related links:

Beast Files Archives

Alexander Shulgin

Merck: The origin of ecstasy

Multi-Disciplinary Association for Psychedelic Research

Nature: Ecstasy eases Parkinson's in mice

Nature: Think Harder About Ecstasy

MDMA - Ecstasy Information, Use, Testing and Treatment



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Perelman declines the Millennium Prize for resolution of the Poincaré conjecture.

A Russian awarded $1million (£666,000) for solving one of the most intractable problems in mathematics said yesterday that he does not want the money.

Said to be the world's cleverest man, Dr Grigory Perelman, 44, lives as a recluse in a bare cockroach-infested flat in St Petersburg. He said through the closed door: 'I have all I want.'

The prize was given by the U.S. Clay Mathematics Institute for solving the Poincare Conjecture, which baffled mathematicians for a century. Dr Perelman posted his solution on the internet.

Four years ago, the maths genius failed to turn up to receive his prestigious Fields Medal from the International Mathematical Union for solving the problem.

At the time he stated: 'I'm not interested in money or fame. I don't want to be on display like an animal in a zoo.

'I'm not a hero of mathematics. I'm not even that successful, that is why I don't want to have everybody looking at me.'

Neighbour Vera Petrovna said: 'I was once in his flat and I was astounded. He only has a table, a stool and a bed with a dirty mattress which was left by previous owners - alcoholics who sold the flat to him.

'We are trying to get rid of cockroaches in our block, but they hide in his flat.'

It was in 2002 that Perelman, then a researcher at the Steklov Institute of Mathematics in St. Petersburg, began posting papers online suggesting he had solved the Poincare Conjecture, one of seven major mathematical puzzles for which the Clay Institute is offering $1 million each.

Rigorous tests proved he was correct.

The topological conundrum essentially states that any three-dimensional space without holes in it is equivalent to a stretched sphere.

The puzzle was more than 100 years old when Perelman solved it - and could help determine the shape of the universe.

After 2003 Perelman gave up his job at the Steklov Institute. Friends have been reported as saying he has resigned from mathematics altogether - finding the subject too painful to discuss.

Additional links:

Millennium Prize Problems
Poincaré Conjecture Press Release
Poincaré Conjecture Press Release 2
http://www.claymath.org/poincare/millenniumPrizeFull.pdf



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The upper echelons of the catholic church continue to defy common sense and dignity for sexual abuse vicitms

At last, one of Pope Benedict's closest aides uses the word "conspiracy" in relation to the systematic global cover-up of child abuse by paedophile Catholic priests. Unfortunately, Cardinal José Saraiva Martins believes the conspiracy is against the Catholic church, which is its victim.

"We should not be too scandalised if some bishops knew about it but kept it secret," he this week told reporters of the sexual abuse, on the same day the Vatican newspaper opted to blame the media for "ignoring the facts". "This is what happens in every family, you don't wash your dirty laundry in public." Though Saraiva Martins declined to spell out who was behind the conspiracy, he informed his listeners darkly: "There is a well-organised plan, with a clear aim."

For those who imagined church-related conspiracies as involving psychotic albino monks, easily decipherable holy grail puzzles, and some guff about the sacred feminine, this all comes as something of a shock. I suppose a cryptex that falls open if you align the letters N, O, N, C and E may yet surface, and x-ray analysis might discover the words "perhaps he could teach at a girls' school next time?" concealed in the rural backdrop of the Mona Lisa.

But for now, if we are to extrapolate his eminence's meaning correctly, the situation seems to be that some shadowy organisation deputised innumerable priests to abuse innumerable children down the decades (and, it seems fairly reasonable to assume, down the centuries). These same obscure evil masterminds then contrived to manipulate the most senior church figures – possibly Calvinist sleepers. Let's not rule anything out – into sweeping the lot under the carpet, frequently allowing priests to be relocated and begin their reign of unbearable horror anew. Then, many years later, our secretive society of conspirators would marshal a co-ordinated global attack by survivors of the abuse, whistle-blowing priests, and the media. This attack would also expose the paper trail of several of these cover-ups, and by some awesomely fiendish orchestration, paths would increasingly lead to the office of the pontiff, who would by that time be the very bloke who had headed the Vatican morals watchdog for the two decades from which some of the highest profile cases date.

It's quite a conspiracy, isn't it? By comparison, hiding the existence of a bloodline stemming from the issue of Jesus and Mary Magdalene for 2,000 years seems about as challenging as falling off a log located three foot from the earth's centre of gravity. Clearly, a plot this complex would be beyond even the capabilities of Spectre. In fact, rather confusingly, one of the only non-governmental international organisations powerful enough to perpetuate any sort of enduring global conspiracy – apart from the Illuminati, Colonel Sanders and whichever lizards David Icke is currently warning against – is the Catholic church.

That is merely one of the many ironies to this growing scandal, though considering the hideous wrongs done to generations of children at the heart of the matter, it is by no means the most revolting. Considerable more distasteful, for instance, is the Vatican's firefighting strategy. When confronted by this week's revelations from Wisconsin, where it emerged that as a cardinal, Benedict appears to have chosen not to discipline a priest accused of abusing up to 200 deaf boys in one school alone, the response of the Vatican newspaper was to accuse the media of acting ignobly.

Meanwhile, instead of insisting on the resignation of Sean Brady, the Irish cardinal who was complicit in two abuse victims being made to sign an oath of silence, Benedict last week responded by sending Irish Catholics an open letter (the paucity of the response rather grimly underscored by the fact that a few days later, West Ham chairman David Sullivan fell back on the same device to excuse a run of poor football results).

Right up there with the most iniquitous church attitudes on display, however, is Cardinal Saraiva Martins's implication that the abuse – or more pertinently the ongoing discovery of it by outsiders – is not a horror of the Vatican's own making but a trial sent to test it. As for who sends such tests, one can only speculate, remembering that of his apparently reluctant elevation to the papacy, Benedict once revealed: "I prayed to God 'please don't do this to me'." How distressingly easy it is to imagine almost that precise prayer being offered up by countless desperate, terrified children. Yet as the abuse scandal closes in on his own involvement, the question is whether Benedict will have the brass neck to extend the logic and yet again cite that odd abnegation of ultimate responsibility to his unseen boss.

It's not the sort of argument that tends to stand up in court, admittedly. But then, that's hardly relevant, as you'll have noted the absence of police chiefs in the scandal-hit dioceses pulling in any suspected coverers-up for questioning, let alone the righteous emergence of anyone approaching a pan-continental Yates of the Yard figure. Indeed, given this is hardly the time to joke that a keen applicant's hobbies should include taking riverside strolls with bricks in their pockets, we might as well accept that the compensation lawyers are our best hope.

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Try as they might, no News Ltd means no Melbourne Storm

Handled correctly, the NRL’s salary cap investigation into Cameron Smith can solve fifteen-sixteenths of the code’s problems as it heads towards an independent commission.

All it needs to do is recommend that Smith’s club, the Melbourne Storm, be wound up.

The Storm, like Paterson’s Curse, is a pretty-looking purple noxious weed. A very well-run and successful rugby league club, with three premierships in its first decade and a bit, a brilliant coach and some of the best players in the game’s history, Melbourne is the extravagant indulgence that is dragging everything else down.
First, some history.

Melbourne was founded as a sop, a gift to appease those who had tried, through Super League, to make the people’s game their own. The chief recipient was John Ribot, who in his playing days was a bullocking, exciting winger for Newtown, Wests, Manly and Australia. Ribot, a Queenslander, had formed a coalition with some Brisbane powerbrokers and News Limited to break the Australian Rugby League’s hold on the sport and was the founding CEO of Super League.

After two years of separate competitions, Super League re-merged with the ARL to form the NRL, partly owned by News. To keep the peace, Ribot was given a club in Melbourne, which he ran for its first seven years. It suited him, and it suited the new league to expand into the southern “market”.

Owned by News, the Storm was allowed to operate at a loss. Rugby league clubs have often depended on subsidies, but this was the first time the subsidising body was the code’s owner, a media organisation whose income derived indirectly from the fans of the other clubs. Melbourne became everyone’s gift to John Ribot.
The Storm immediately won a premiership in 1999, its second season, and established the kind of club culture that flourishes in an environment of exile. Nobody recognises or bothers the players in Melbourne’s streets, the club is their family, they have nothing to do but focus on their football, and they are encumbered by none of the old-boys networks or habits of slackness that take root in clubs that are hundreds of years old.
Run by competent administrators and utilising the best scouts, Melbourne has been able to spot players like Smith, Greg Inglis, Billy Slater, Israel Folau, Cooper Cronk, Ryan Hoffman, Scott Hill and Matt Geyer in their footballing infancy and hothouse them south of the border.

All well and good. Another two premierships and four consecutive grand-final appearances followed. A great success. Why, then, isn’t there an overwhelming push for a second Melbourne NRL franchise?

Because, for all of its onfield success, the Storm franchise is a failure. Melbourne has been haemorrhaging money at a rate that has only recently become clear. They have a tiny, if devoted, fan base which is not large enough to sustain the club. They have not been successful in attracting the media’s, sponsors’ or the public’s interest in Melbourne to the degree where they can be financially viable. They are kept alive by the largesse of News Limited. And now that News is pulling out of the game, Melbourne expects the other clubs to continue to help it win premierships at their expense.

As the books have been opened in the process of forming the independent commission, from the other 15 clubs there has been a collective: “Eh? Come again?”

Melbourne, with such deep pockets for players, coaches, staff and facilities, has been living beyond its means to the tune of about $6 million a year. News — which derives some of its income from the fans who subscribe to pay-TV and go to games — has been covering those losses. The main sticking point in the move towards an independent club-owned commission has been Melbourne holding out its hand asking everyone else to keep covering its losses and funding its success.

Now, think how this looks to the other clubs. Of every dollar they scrap and beg for, in sponsorship drives or marketing pushes or merchandise ideas, some of it goes to a club that is allowed to walk away with premierships. Every other club has to fight tooth and nail to remain profitable. Cronulla has never won a premiership. St George hasn’t won one for 30 years. Souths haven’t won one for 40. North Queensland and the Gold Coast, two good new clubs in real rugby league communities, haven’t won a premiership.
Meanwhile Melbourne, which has had its sugar daddy buying premierships for it, now wants them to keep up the inflow so it can continue to live beyond its means. Eh?

Every other club has to compete under the salary cap for the best players. Not Melbourne, which has been able to spend what it likes and — in the ultimate outrage — keep the best forward in Australia, the club captain, due to News Limited, through Foxtel, actually paying him again.

And for what? So the NRL can call itself a national game? Comparisons may be drawn with the benefits enjoyed by the Sydney Swans over the years. But at least there is a real, thriving interest in the AFL in Sydney. At least some players from Sydney, and NSW, actually play for and have played for the Swans. (Melbourne Storm’s count of locals: nil.) At least the Swans draw good crowds and the public’s affection even when they’re not winning.

The Melbourne Storm, even having sucked the best playing talent out of the other clubs, even being winners, still can’t pay its way. How is that fair? And how is it fair that fans of the other clubs have to pay Cameron Smith’s wage not only once, but twice?

The answer is simple. It only requires some brave souls to stand up and say to the Storm: you’re on your own now, and good luck to you.

Malcolm Knox is an award-winning author and journalist. He writes for Back Page Lead, a new sports opinion site at backpagelead.com.au.


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Gillard blames Serco for Villawood escape

THE government has blamed private company Serco for allowing three men to escape detention in Sydney just days after security was boosted to accommodate failed refugees from Christmas Island.

The Chinese men scaled a fence at the high-security Villawood immigration detention centre about 5 am yesterday and were still at large last night.

The security blunder coincided with the arrival at Christmas Island of another two boatloads of asylum seekers. The boats add 85 people to the strained detention facilities. This year, 32 boats have ferried more than 1500 asylum seekers and crew to Australian waters.

Deputy Prime Minister Julia Gillard said Serco had performed unacceptably. Immigration Minister Chris Evans also reprimanded the company, and his department was last night working with New South Wales police to recapture the men.

''We obviously don't want to see any repeat of this poor conduct,'' Ms Gillard said. ''They are paid good money to manage it and it is their responsibility to manage it properly, including making sure that people who are in detention stay in detention.''

The escapees, two of whom overstayed their visas and one who arrived unauthorised by air, were held in a separate unit to the 89 people transferred from Christmas Island on Saturday.

Opposition Leader Tony Abbott said the escape showed government ineptitude.

''Today the 100th boat has arrived at Christmas Island since the Rudd government abandoned the Howard government's border protection policies,'' Mr Abbott said.

More transfers to the mainland are expected this week, a department official said. The department has ordered a full investigation and report from Serco over the escape.

The company was forced to sack 10 staff after another four people absconded in as many weeks.

''The department views any escape from an immigration detention facility very seriously,'' the spokesman said. David Manne, the immigration lawyer for 17 of the people refused protection visas on Christmas Island, said the government was breaking its own rules by locking the men up at Villawood.

''It's a breach of their own regulations. It said asylum seekers should be detained only if they presented clear health and safety risks to the community,'' he said.


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Things Bogans Like - #111 – Zoo Weekly

For decades, female bogans have happily purchased lifestyle magazines. These publications gave the 1950s housewife new recipes, new things to knit, and new ways to grip the shaft of a feather duster. By the 1970s, these magazines had started to change, with an increase in articles about TV shows and movie stars. By the 1990s, the race to the bottom had reached fever pitch, with illicit affairs, and celebrity cover-ups competing for the female bogan’s dwindling attention span. In the mid 90s, the publishers observed that all they were providing to the female bogan was smut, scandal, and sex tips. “May I suggest that male bogans want these things too”, said one junior publishing executive, observing the convergence of bogan genders.

Ralph, part of the Kerry Packer bogan harvesting empire, arrived on the scene in 1997. They featured scantily clad women on the front, and enough sport and smut to convince some of the more progressive male bogans to stop buying People/Picture magazine (both Packer enterprises). The other benefit of Ralph  for the male bogan, was that each edition contained a smattering of health/lifestyle articles that the male bogan would never read. These articles made the magazine technically not porn, and female bogan spouses found it more difficult to object to the magazine’s presence in the toilet at casa de bogan.

This uneasy truce continued until 2006, when the ultimate bogan male publication appeared on shelves. Zoo Weekly does away with any health and wellbeing content, replacing it with additional scantily clad women, and some more articles that valiantly attempt to classify Lara Bingle photo shoots as AFL/cricket news. The magazine has a team of female sex advice columnists dubbed “The Threesome”, which appeals to the male bogan’s desire for x-treme group sex (but with no other blokes, because that’d be gay). It even contains former Big Brother contestants as columnists, along with classic bogan beer pit David Boon. None of these columns are more than 200 words in length, due the bogan’s preference for bright colours and silicone breasts over letters and numbers. The Packer empire forked out $94 million in 2007 to acquire Zoo Weekly and tap into this pulsating new vein of boganity. Also included in the deal was the acquisition of Ralph rival FHM.

Zoo Weekly’s publisher pitches its bogan audience to advertisers  as “living for the next party, the next gadget, and the next girl”, a summary that compelled the bogan’s girlfriend to start a loud argument about the ongoing presence of the magazine in its house. Initially, the male bogan conceded. For the next few weeks, the bogan male purchased Ralph, and tried to convince itself that the volume of tits in there was adequate. Its relationship improved, with the female bogan seeming oddly grateful that Ralph was around, the very publication that it decried only a decade earlier. In March 2010, she sent her man down to 7-Eleven to purchase a Diet Coke to pair with her bag of lollies. At the drinks fridge, the male bogan spied the promotional placard that would lead to its undoing: “500ml can of Mother and copy of Zoo Weekly for only $6!”. His relationship was doomed.

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Coachella 2010 - 19 days to go

This is one of the all time great music festivals with line-ups that continue to excel year after year.

Kate Miller-Heidke (pictured below) has quietly slipped on to the bill for Friday 16th April, do not miss her if you have the chance, this supergirl is more than a bit of alright.

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Ben Horne - Tony Williams ready to roar for Manly

With Manly desperate for a new weapon in their backline following Brett Stewart's season-ending injury, the NRL club's sleeping giant, Tony Williams appears to have finally awoken.

With something to prove after a disappointing debut season with the club last year, Williams was at his destructive and skillful best in the Sea Eagles' 36-12 demolition of Newcastle on Saturday night.

Standing at 192cm and weighing in at a whopping 114kg, Williams is bigger and taller than Manu Vatuvei, Lote Tuqiri and Taniela Tuiaki and heavier than Israel Folau and Greg Inglis.

Nicknamed `T-Rex', the former Parramatta monster was unstoppable against the Knights and wants to carry that form throughout the entire season.

"It's good to be back in form and a good off-season helped me out," he said.

"After a disappointing season last year it was a big goal for me to come back into good form and just play good football.

"Just coming off that big injury (hamstring) in the (2009) pre-season, I guess I just never fully recovered from that ... this year was always a big goal for me to come back firing."

He begun the year in the centres and he's previously been talked about as a backrower, but with his lethal combination of size, power and speed, Williams said he feels at home on the wing.

The Tongan international is relishing the opportunity to play on the end of Manly's right-side attack, which features the brilliance of Glenn Stewart and Jamie Lyon.

Against Newcastle, Williams directly set up two tries with his strong charges down the right-side. He put Ben Farrar across with a beautiful one-handed inside ball, and later in the first half he again broke away before summing up the situation perfectly with a neat centre-field kick for Steve Matai to collect.

"To be honest, I've played that many games on the wing it's second nature. I enjoy playing there but it doesn't matter where I play, as long as I'm in first grade," Williams said.

"It's actually a privilege to play alongside good players like that (Stewart and Lyon) and with them there it's always good to run off them."

Injured fellow winger David Williams, watched `T-Rex' progress through the junior grades at Parramatta and believes his namesake is primed for a breakthrough season.

"There's no time like the present and he's been going gangbusters," said David Williams of Tony.

"He was ruthless, absolutely ruthless (through the junior grades). He would just run riot pretty much and hopefully we can see him do stuff like that every week.

"He's had a stellar off-season, he's gained some pace and trimmed down, so he's looking good and showed a glimpse of what he can do (against Newcastle).

"My personal opinion is a bloke that size should be in the second row but when he's got pace like that to burn, and the agility, you can't fault him in any position he wants to play."

Coach Des Hasler is also excited about the prospect of Williams continuing his damaging form.

"We've always believed in his ability and he's producing some great touches out there," Hasler said.

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